How Non-Chinese Employees respond to the Chinese Paternalistic Leadership: A Study Conducted in the Context of Denmark (Research Paper Sample)

How Non-Chinese Employees respond to the Chinese Paternalistic Leadership: A Study Conducted in the Context of Denmark
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Introduction
Background
The Chinese economic reforms that started in 1978 have led China into new and far-reaching economic milestones. The reforms’ role in integrating the Chinese economy with the global economy has proved to be of much importance for both China and other countries. According to Schortgen (2009), the reforms plus the Chinese government’s effort towards restructuring the Chinese economy have led China into attaining more internationally accepted standards and norms of business interaction, and increasing market-conforming business strategies. For instance, the country’s joining of the World Trade Organization (WTO) in 2001 played a crucial role in streamlining Chinese business strategies, norms and standards with those that are internationally accepted. This membership, and other reforms that China has carried out since 1978 have also encouraged a rapid increase in Foreign Direct Investment (FDI); moving both in China from other countries, and out of China to other Countries. Although the current inward FDI is more than the outward FDI CITATION FSc09 \l 1033 (Schortgen, 2009), the latter has been very important to China’s economic growth. Owing in mind to this, it is highly important for the country to find ways through which it can boost its past border investments.
Following China’s membership to the WTO in 2011, its total outward FDI increased from $2.5 billion in 2002 to $11.3 billion in 2005, $32.4 billion in 2006, and to $90 billion in 2007CITATION Ann12 \p 3 \l 1033 (Westenholz, 2012, p. 3). This trend represents a rapid increase in the outward FDI because it shows increasing marginal increases in the increase of FDI as time goes by. A research conducted by Busch et al. (2013), also indicates increasing marginal increases in both the Chinese FDI in Germany and the German FDI in China in the period occurring from1990 to 2009. Graph 1 below indicates this trend. According to Busch et al. (2013), this increase in FDI has contributed a lot towards improving relations between China and Germany. Essentially, each of this countries continually integrate in each other’s culture, ways of living, and ways of doing business. Therefore, it is very important for China to establish ways of strengthening this relationship in order to maintain Germany as an ally.
Graph SEQ Figure \* ARABIC 1: Chinese FDI in Germany and the German FDI in China (Busch et al., 2013)
The rapid rise in both the Chinese investment to other countries and foreign investment into China in the last 30-35 years has created a greater need to understand the Chinese business environment. Specifically, understanding Chinese organizational leadership behaviors is of much importance to the success of both Chinese investors in foreign countries, and foreign investors into China. This aspect is true because of the one widely known reason, that leadership is the ultimate determinant of the success of business organizations.
Leadership as a social process is a universal phenomenon that goes beyond national boundaries (Anne et al., 2000). While many authors have found this information to be true CITATION Jii00 \l 1033 \m Rem13 \m Mar122(Farh & Cheng, 2000; Iliesa, et al., 2013; Mendenhalla, et al., 2012), leadership styles, conceptions, and practices still vary widely across cultures. For instance, most organization working under the Western and the European cultures advocate for leadership styles that allow more collaboration between the leader and the subordinates, less superiority of the leader, more persuasiveness from the leader, and more participation of the subordinates in decision making CITATION Ayo12 \l 1033 (Benson, 2012). Such leadership styles include: the transformational, the participative, and the behavioral leadership styles. On the other hand, most organizations operating under the African and Asian cultures are headed through leadership styles that allow more superiority to the leaders, less involvement of the subordinates, and more centralized decision making CITATION Ayo12 \l 1033 (Benson, 2012). Such leadership styles include: the authoritative, the transactional, the situational, the paternalistic, and the great man leadership styles.
The US transformational leadership is the world’s most prevalent leadership style in the organizational context. In fact, almost all of the current theories and models of organizational leadership are dominated by formulations of US researchers and authors, who seem to favor the transformational leadership more than the others. Additionally, the other leadership styles preferred by people working under the US and European cultures are also dominant over those that are preferred by the Asian and African cultures. Actually, most Asian, European, and African learning institutions teach organizational leadership-related subjects in favor of the Western-related leadership styles, theories and models. For these reasons, many business organizations across the globe adopt Western leadership styles without even investigating whether these styles fit well with the cultures that the organizations are operating in. In the context of the Chinese culture, most of the previously conducted empirical research on leadership styles has been based on Western theories and models. Although this kind of research is effective for testing the applicability of the Western leadership styles in Chinese organizations, it is not effective in helping to understand the leadership conditions of the Chinese organizations. As many authors have noted, the cultural differences of Asia and the US are the deepest CITATION Yue11 \l 1033 \m Sha14 \m Shi11(Li, 2011; Luo, 2014; Xiumei & Jinying, 2011). In this regard, the indiscriminate use of Chinese leadership models and theories in empirical research undermine the role of China as a key player in the international market. While this situation is occurring, China’s investment in other countries and foreign investment in China is currently increasing at the fastest rate. Specifically, the rapid rise in China’s investment to other countries is raising organizational leadership concerns because Chinese investors to foreign countries are taking with them a much distinct style of leadership from the widely-accepted Western leadership styles. This leadership style, known as the paternalistic leadership style, has been popular only among organizations in China for a long time. However, the rapid establishment of Chinese organizations and subsidiaries in other countries in the last 30-35 years, has made this style of leadership one of the most popular in the world. In fact, recent studies have found that the Chinese Paternalistic leadership has become the most prevalent style of leadership among business organizations in countries such as Indonesia, Taiwan, Singapore, Hong Kong, Philippines, Pakistan, Japan, India, among other countries neighboring China (,,,,,). Studies have also shown a rising influence of this leadership style in the business sectors of some European, Western, and African countries. The worst thing about this situation is that this style of leadership has not been properly understood and experienced by non-Chinese employees. Essentially, only a few researchers have studied this style of leadership and its effectiveness in different countries. Therefore, the increasing global popularity of this leadership style is a critical issue that needs investigation.
The paternalistic leadership is a managerial approach that involves a leader who possess authority like that of a matriarch or patriarch, and treats employees as if they were members of a large or extended family. When using this leadership style, the leader is a dominant figure and he/she expects loyalty, obedience, and trust from the employees. Although the employees are allowed to contribute towards decision making, the leader is the ultimate decision maker, and he/she can denounce the contributions of all the employees and pass a decision that is completely different from their point of view. In essence, employees working under a paternalistic leader assume that the leader knows what is best for the company and it is up to them to uphold what he or she passes as the way forward. This leadership style contains three dimensions of leadership including authoritarian, benevolent and moral. These dimensions will be discussed further in both the literature review and the discussion sections of this thesis.
Statement of the Problem
Compared to Western and European companies and investors, Chinese companies and investors have been observed to perform poorly in foreign countries. According to (----), one of the most prevalent reasons for the poor performance of these companies and investors is the cultural difference between China and the other countries. Essentially, the Chinese culture has not globalized as much as the Western and the European cultures, which means that it is not as much globally popular as the European and the Western culture. In fact, learning institutions in most Asian countries learn the Western culture more than they study the Chinese culture, despite China being a neighboring country to most of them. Actually, Chinese learning institutions also teach a lot of the Western and European cultures. This difference has become a problem because organizational leaders from China choose to maintain their own cultural and leadership qualities in the foreign countries thus creating a cultural conflict between the employees’ culture and the organizational culture.
Leaders...